The case is an example of why employers should be aware that the Protecting Vulnerable Workers Act 2017 has now come into effect
A former manager of the Oliver Brown chocolate café outlet on the Gold Coast has been penalised $27,200 for exploiting overseas workers and “seeing what he could get away with”.
The Fair Work Ombudsman brought the case against Steven Chung before the Federal Circuit Court for underpaying 12 employees between January and September 2015.
Seven of the employees were overseas workers, including five Koreans. Four were on 417 working holiday visas and others were on a 457 skilled worker visa, 444 special category visa and a partner visa.
Among the 12 were four juniors: two 18-year-olds, one aged 19 and one aged 20.
The workers performed tasks such as washing dishes, taking orders and making drinks and desserts.
They were underpaid by a total of $24,575. Chung was involved in underpayments from 11 July, when he assumed the manager role.
“He discriminated against a number of the employees, on, it would seem, the basis either of coming from a non-English speaking background, having a visa or their youth,” said Judge Salvatore Vasta.
“There doesn’t appear to be any other explanation as to why there were some rates given to some people and other rates to others, except when one looks at the personal and cultural background of the workers.”
Vasta observed that a worker on a visa who came from a non-English speaking background was underpaid more than a person who is a permanent resident of this country from an English-speaking background.
Chung used different low flat rates that resulted in workers variously being underpaid the minimum rates for ordinary hours, casual loadings, and penalty rates for weekend, public holiday, late night and early morning work they were entitled to under the Restaurant Industry Award 2010.
The rate of underpayment, extrapolated over the course of a year, would have resulted in underpayments in the order of $80,000, the judge said.
The workers were back-paid in full late last year.
Chung also did not provide pay slips to the workers, an “extremely serious breach of an employer’s obligations.” It also showed a level of discrimination by Mr Chung as to whom he gave pay slips and to whom he did not, said the judge.
Fair Work Ombudsman inspectors discovered the underpayments when they conducted an audit after a worker made underpayment allegations.
Fair Work Ombudsman Natalie James said the targeting of vulnerable workers with low discount flat rates was a particularly concerning feature of the case.
James said that while migrant workers made up 6 per cent of the workforce, they were involved in 18 per cent of the workplace disputes that the Fair Work Ombudsman assisted with in the last financial year.
James added that employers should be aware that the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 has now come into effect, increasing maximum penalties for conduct including deliberate exploitation of workers.
The new law means there will be a higher scale of penalties (up to 10 times the current amount) for a new category of ‘serious contraventions’ of prescribed workplace laws.
These changes have been introduced to address exploitation of vulnerable workers - as illustrated in the 7-Eleven wage scandal - by also holding those higher up the supply chain responsible, according to Rigby Cooke Lawyers partner and workplace relations specialist Simone Caylock.
“From 27 October 2017, the law placed a new onus on franchisors and parent companies to demonstrate they have taken reasonable steps to prevent a franchisee or subsidiary from contravening the FWA,” said Caylock.
“Failure to prove so could potentially lead to a civil proceeding and those fines of up to $630,000 per breach.”
The Fair Work Ombudsman brought the case against Steven Chung before the Federal Circuit Court for underpaying 12 employees between January and September 2015.
Seven of the employees were overseas workers, including five Koreans. Four were on 417 working holiday visas and others were on a 457 skilled worker visa, 444 special category visa and a partner visa.
Among the 12 were four juniors: two 18-year-olds, one aged 19 and one aged 20.
The workers performed tasks such as washing dishes, taking orders and making drinks and desserts.
They were underpaid by a total of $24,575. Chung was involved in underpayments from 11 July, when he assumed the manager role.
“He discriminated against a number of the employees, on, it would seem, the basis either of coming from a non-English speaking background, having a visa or their youth,” said Judge Salvatore Vasta.
“There doesn’t appear to be any other explanation as to why there were some rates given to some people and other rates to others, except when one looks at the personal and cultural background of the workers.”
Vasta observed that a worker on a visa who came from a non-English speaking background was underpaid more than a person who is a permanent resident of this country from an English-speaking background.
Chung used different low flat rates that resulted in workers variously being underpaid the minimum rates for ordinary hours, casual loadings, and penalty rates for weekend, public holiday, late night and early morning work they were entitled to under the Restaurant Industry Award 2010.
The rate of underpayment, extrapolated over the course of a year, would have resulted in underpayments in the order of $80,000, the judge said.
The workers were back-paid in full late last year.
Chung also did not provide pay slips to the workers, an “extremely serious breach of an employer’s obligations.” It also showed a level of discrimination by Mr Chung as to whom he gave pay slips and to whom he did not, said the judge.
Fair Work Ombudsman inspectors discovered the underpayments when they conducted an audit after a worker made underpayment allegations.
Fair Work Ombudsman Natalie James said the targeting of vulnerable workers with low discount flat rates was a particularly concerning feature of the case.
James said that while migrant workers made up 6 per cent of the workforce, they were involved in 18 per cent of the workplace disputes that the Fair Work Ombudsman assisted with in the last financial year.
James added that employers should be aware that the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 has now come into effect, increasing maximum penalties for conduct including deliberate exploitation of workers.
The new law means there will be a higher scale of penalties (up to 10 times the current amount) for a new category of ‘serious contraventions’ of prescribed workplace laws.
These changes have been introduced to address exploitation of vulnerable workers - as illustrated in the 7-Eleven wage scandal - by also holding those higher up the supply chain responsible, according to Rigby Cooke Lawyers partner and workplace relations specialist Simone Caylock.
“From 27 October 2017, the law placed a new onus on franchisors and parent companies to demonstrate they have taken reasonable steps to prevent a franchisee or subsidiary from contravening the FWA,” said Caylock.
“Failure to prove so could potentially lead to a civil proceeding and those fines of up to $630,000 per breach.”